No.{ for CAICWA & MECICEC MASTER MINDS 1. COST SHEET NO. OF PROBLEMS IN 40E OF CA INTER: CLASSROOM - 07, ASSIGNMENT — 02 NO. OF PROBLEMS IN 41E OF CA INTER: CLASSROOM - 07, ASSIGNMENT - 02 NO. OF PROBLEMS IN 42E OF CA INTER: CLASSROOM - 06, ASSIGNMENT - 05 NO. OF PROBLEMS IN 42.5E OF CA INTER: CLASSROOM — 04, ASSIGNMENT — 05 MODEL - WISE ANALYSIS OF PREVIOUS EXAMINATIONS N-18(0) N=180%) 1990) 1990] N-19(N) N-19(0) BP a M15 M16 M13 M-14 nt 1800) 180) M11 N-1t M-12 Problem ] Problem ] Problem | Problem No. in this | No. innew | No.inold | No.inold | pp | mp. Previous Exams | Remarks material | SM sit PH CRA 2 : GR - : ‘ a, Ww 2 CRA : ; we’ z NOW-19(N) asG-1 [Lt Z : NOVAG(N) z ASG-2 zi - zi ASG-3 : = : ‘A Cost Sheet or Cost Statement i1 "a document which provides detailed cost information. In a typical cost sheet, cost information are presented on the basis of functional classification. However, other classification may also be adopted as per the requirements of users of the information, Generally, for the purpose of cost sheet preparation, costs are classified on the basis of functional classification of elements of cost i.e, i) Direct Material Cost ii) Direct Employee (labour) Cost iii) Direct Expenses iv) Production! Manufacturing Overheads v) Administration Overheads vi) Selling Overheads vii) Distribution Overheads Research and Development costs etc. COST SHEET/ STATEMENT Particulars Total Cost (Rs.) teleestt 1_[Direct materials consumed: = Opening Stock of Raw Material ax ~ Add: Additions/ Purchases 1K = Less: Closing stock of Raw Material (09) 700 aa CA Inter _42.5e(2nd Version)_Costing (P)_Cost Sheet.Ph: 98851 25025/26 2__ [Direct employee (labour) cost xx] 3__|Direct expenses 200 4 _|Prime Cost (1#2#3) 20x 5 _|Works/ Factory Overheads OK, 6 _ [Gross Works Cost (4+5) 00( 7__[Add: Opening Work in Process xX) 8 _| Less: Closing Werk in Process (G0xx) 9 _|Works/ Factory Cost (6+7-8) 2x] 10 | Quality Control Cost XXX, 41_[Research and Development Cost 200 12 Administrative Overheads (relating to production XxX) activity) 13° |Less: Credit for Recoveries / Scrap / By-Products / Misc. (009) income 44 |Add: Packing cost (primary) aK 15 _|Cost of Production (9+10+1 1412-13444) XXX 46 |Add: Opening stock of finished goods 2004 17_|Less: Closing stock of finished goods 300K 18 |Cost of Goods Sold (15+16-17) XXX, 49 |Add: Administrative Overheads (General) 20 |Add: Marketing overheads - Selling Overheads x 700 - Distribution Overheads Xoo 21 _|Gost of Sales (18+19+20) 200 Advantages of cost sheet or coststatement: The main advantages of a Cost Sheet are as follo@Qw” a) It provides the total cost figure as well ae Unit of production, b) Ithelps in cost comparison. ¢) Itfaciltates the preparation of cost estimates requited for submitting tenders. 4d) It provides sufficient help in arriving at the figure of selling price. e) It facilitates cost control by disclosing operational efficiency. ITEMS OF PURE FINANCE 4, TREATMENT: Ignore 2, MEANING: a) Any expenditure incurred in connection with raising & serving the capital. (E.g. public issue expenses, dividend, interest). b) Any expenditure/loss incurred in connection with collection of debtors. (E.g. discount, bad debts, provision for bad debts). NON COST RELATED ITEMS: 4. TREATMENT: Ignore 2. MEANING: Expenses having no direct or indirect relationship with production. 3. E.G.'s: Write off's (ike Goodwill written off), Capital losses/profits, Appropriation of profits (like transfer to reserve, dividends paid) , Income Tax (Income tax paid, Advance tax, TDS, Provision for tax, Income tax refund, Interest on refund), Donations etc. QUALITY CONTROL COST: This is the cost of resources consumed towards quality control procedures. CA Inter _42.5e (2nd Version)_Costing (P)_Cost Sheet 1.2No.t for CAICWA & MECICEC MASTER MINDS Example: A manufacturer has set-up a lab for testing of products for compliance with standards, salary of this lab staffs are part of Quality Control Cost RESEARCH AND DEVELOPMENT COST: It includes only those researches and development related cost which with is incurred to improvernent of process, system, product or services, CREDIT OF RECOVERIES: The realized or realizable value of scrap or waste is deducted. PACKING COST (PRIMARY): Packing material which is essential to hold and preserve the product for its use by the customer. TREATMENT OF VARIOUS EXPENSES ADVERTISEMENT Attracting of Launching a Staff Tenders for Public issue Customers new product recruitment purchase of ‘expenses, 1 { raw material J | SalesOQH Administration OH Item of pure Sales OH DM Cost finance - ignore —_— EXPENSES Storage of Raw Finished Goods.@>y Storage of P&M materials | LP | nn COS i Direct Material Cost Selling Qyepads Ignored Oh Raw Material Purchases YN P&M Purchases ¥ ¥ Direct Material cost Added to P&M cost i.e., ignored SCRAP SALES DM 1.D.M. mye ‘ 4 Gross Works cost WN 4— WN1-() oO — Scrap value. PACKING Primary Packing Secondary Packing eg. * bottle .g.: Ink bottle carton Direct Material cost Sales Overheads CA Inter _42.5e(2nd Version)_Costing (P)_Cost Sheet. 1.3Ph: 98851 25025/26 www.mastermindsi BRANCH OFFICE EXPENSES Proximity to Customers Proximity to Raw Material OH Direct material cost INSURANCE EXPENSES L J 1 J LOS Policy Building Insurance LOP Policy | { { AOH ey ‘AOH Factory Office Sales Factory overheads AOH ‘SOH e SS Normal Loss Abnormal loss same as R.M. oe same as RM coun Nouse EXPENSES ee FG Counting Cash counting -SOH -AOH CUSTOMS DUTY/EXCISE DUTY For RM - MC For P&M - Capitalise Loss (RM) Normal loss ‘Abnormal loss q ¥ [Charged to customer] Transfer to costing p&l a/c (Should not be charge to customer) CA Inter _42.5e (2nd Version)_Costing (P)_Cost Sheet 14No.{ for CAICWA & MECICEC MASTER MINDS Tax/Duties Direct tax Indirect tax y Ignore Charged to customer Training cost v Direct worker In Direct worker f + ‘Charged to Off the job ‘On the job | customer & y Direct wages FOH || AOH || S&DOH PROBLEMS FOR CLASS ROOM DISCUSSION PROBLEM 1: The following information has been ci om to records of ABC Corporation for the period from June 1 to June 30, 20X8. 6 3S ‘On June 4, ‘On June 30, DS) 20X8 (Rs.) 20X8 (Rs.) Cost of raw materials 60,000] 50,000 Cost of work-in-process: 12,000 15,000 Cost of stock of finished goods 90,000] 1,10,000 Purchase of raw materials during June’ 20X8 4,80,000 Wages paid 2,40,000 Factory overheads 1,00,000) Administration overheads (related to production) 50,000 Selling & distribution overheads 25,000 Sales 10,00,000 Prepare a statement giving the following information: a) Raw materials consumed; b) Prime cost; c) Factory cost; d) Cost of goods sold; and e) Net profit. Concept question: a) What is the sale value, ifit requires a profit of 20% on sales? Ans: 11,02,500] CA Inter _42.5e(2nd Version)_Costing (P)_Cost Sheet. 15Ph: 98851 25025/26 ww stermindsi b) What is the sale value, if it requires a profit of 10% on cost? [Ans: 9,70,200] (A) (NEW Std) (ANS. (AJRAW MATERIALS CONSUMED = 4,90,000 : (B) PRIME COST = 7,30,000; (C) FACTORY COST = '8,27,000; (D) COST OF GOODS SOLD = 6,57,000; (E) NET PROFIT = 1,18,000) (SOLVE PROBLEM NO. 1 OF ASSIGNMENT PROBLEMS AS REWORK) Note:, PROBLEM 2: Following information relate to a manufacturing concern for the year ended 31* March, 2018: Rs. Raw material (opening) 2,28,000 Raw material (closing) 3,05,000 Purchase of raw material 42,25,000 Freight inwards 1,00,000 Direct wages paid 12,56,000 Direct wages o/s at the end of the year 1,50,000 Factory overheads 20% of prime cost Work In progress (opening) 1,92,500 Work In progress (closing) 1,40,700 Administrative overheads (related to production) 1,73,000 Distribution expenses Rs.16 per unit 6,08,500 Sale of scrap of material Ss 8,000 The firm produced 14000 units of output during the stock of finished goods at the end of the year is valued at cost of production. The firm sols units at a price of Rs.618 per unit during the year, Prepare cost sheet of the firm. $2019(NEW)ANS: €.0.P -70,00,000; PROFIT 14,43,606) (SOLVE PRC 2 OF ASSIGNMENT PROBLEMS AS REWORK Pg no:5.10) Finished stock (opening) - 1217 units WS Concept questions (@) Find closing stock, if closing stock units include opening stock of 364 units (ans: 532,000) Note:, PROBLEM 3: (PRINTED SOLUTION AVAILABLE) M/s Areeba Private Limited has a normal production capacity of 36,000 units of toys per annum. The estimated costs of production are as under: a) Direct Material Rs 40 per unit b) Direct Labour Rs 30 per unit (subject to a minimum of Rs 48,000 p.m) ¢).Factory overheads i) Fixed 3,60,000 per annum ji) Variable Rs 10 per unit Semi- Variable Rs 1,08,000 per annum up to 50% capacity and additional Rs. 46,800 for every 20% increase in capacity or any part thereof. ) Administrative Over Heads Rs 5,18,400 per annum(fixed) e) Selling overheads are incurred at Rs 8 per unit ) Each unit of Raw material yields scrap which is sold at the rate of 5 per unit g) In year 2018, the factory at 50% capacity for the first three months but it is expected that it would work at 80% capacity for the remaining nine months CA Inter _42.5e (2nd Version)_Costing (P)_Cost Sheet 1.6No.t for CAICWA & MECICEC MASTER MINDS hh) During the first three months the selling price per unit was Rs 145 You are required to i) Prepare a cost sheet showing Prime cost, Works cost, Cost of Production and cost of sales ii) Calculate the selling price per unit for remaining nine months to achieve the total annual profit of Rs.8,76,600. (MAY ~ 2019(NEW) (ANS.:() Prime cost:17,05,500, Works Cost: 25,04,700, Cost of production: 30,23,100, Cast of sale: 32,31,800, (a) Cost of SP RS160 p. a) CONCEPT QUESTION: |F SEifl VARIABLE ~106000 IS UP TO 50% CAPACITY AND ADDITIONAL 46,00 FOR EVERY 50% INCREASE IN CAPACITY OR ANY PART THERE OF. (ANS:COP=26,16,100) Note:, PROBLEM 4: XYZ a manufacturing firm, has revealed following information for September, 2019. Particulars 1% September | 30" September Raw materials 242,000, 2,92,000 Works — in — progress 2,00,000 5,00,000 The firm incurred following expenses for a targeted production of 1,00,000 units during the month: Particulars = Rs. (Consumable Stores and spares of factory « 3,50,000) Research and development cost for process improvements 2,50,000| Quality control cost SS 2,00,000 Packing cost (secondary) per unit of goods sith 2 Lease rent of production asset \ 200,000 ‘Administrative Expenses (General) 2,24,000 ‘Selling and distribution Expenses, 413,000 Finished goods (opening) Nit Finished goods (closing) 5,000 Units Defective output which is 4% of targeted production, realizes Rs. 61 per unit. Closing stock is valued at cost of production (excluding administrative expenses) Cost of goods sold, excluding administrative expenses amounts to Rs. 78,26,000. Direct employees cost is % of the cost of material consumed Selling price of the output is Rs. 110 per unit. You are required to: (i) Calculate the value of material purchased (ii) Prepare cost sheet showing the profit earned by the firm. (NOV19}(N)(SOLVE PROBLEM NO. 4 OF ASSIGNMENT PROBLEMS AS REWORK) CONCEPT QUESTION: ‘What would be the impact on the question if, Direct employees cost is 100% of the cost of material consumed. Note:, CA Inter _42.5e(2nd Version)_Costing (P)_Cost Sheet. 17Ph: 98851 25025/26 ww TET TU OR esis Gnd PROBLEMS NUMBERS TO WHICH SOLUTIONS ARE PROVIDED: Cost sheet of M/s Areeba Pvt. Ltd. for the year 2019 Normal Capacity: 36,000 units p.a. stermindsi ae Months 4,500 Units {9 Months 21,600 Units ‘Amt. (Rs.) | Cost Per Unit (Rs.) | Amt. (Rs.) | Cost Per Unit (Rs.) Direct material 1,80,000 -| 864,000 - Less: Scrap (22,500) -|_(4,08,000) | Materials consumed 1,57 500 35] 7,586,000 Es Direct Wages 1,44,000 32| _ 6,48,000! 20) Prime Gost 3,01,600 67| 14,04,000] 65 Factory Overheads Fixed 90,000 -| _ 2,70,000 - Variable 45,000 -| 2,16,000 | Semi Variable 27,000 36| 151,200 29.50 Work Cost 4,63,500| 103] 20,41,200 94.50 Add: Administrative Overheads 1,29,600 28.80] _3,88,800 18.00] (Cost of Production 593,100 134.80| 24,30,000) 112.50) Selling Overheads 36,000] Months **Months} 151.200 (monte *MOM*S | ++ 46,800 (for 20% Increase) + 23,400 (for 10% Increase) Selling Overheads [36,000 (Rs. 8 x 4,500 Units) 1,72,800 (Rs. 8 x 21,600 Units) Not. 1, Alternatively scarp of raw material can also be reduced from Work cost. 2. Administrative overhead may be treated alternatively as a part of general overhead in that case. Works cost as well as cost of production will be same i.e. Rs. 4,63,500 and Cost of Sales will remain same as Rs. 6,29,100. 2, Calculation of Selling price for nine months period Particulars ‘Amounts (Rs.) Total Cost of Sales (Rs.6,29,100 + 26,02,800) 32,31,900 /Add: Desired profit 8,76,600 Total Sales value 41,08,500 CA Inter _42.5e (2nd Version)_Costing (P)_Cost Sheet 1.8No.{ for CAICWA & MECICEC MASTER MINDS Less: Sales value realised in first three months (Rs. 145 x 4,500 units) (652,500) ‘Sales Value to be realised in next nine months '34,56,000 No. of units to be sold in next nine months 21,600] ‘Selling price per unit (Rs. 34,56,000 =21,600 Units) 160) ASSIGNMENT PROBLEMS PROBLEM 1: The following data relates to the manufacture of a standard product during the month of April, 20X8: Raw materials Rs 1,60,000 Direct wages Rs 90,000 Machine hours worked (hours) 70,000 Machine hour rate (per hour) RsB ‘Administration overheads R5.35,000 Selling overheads (per unit) RSS Units produced 4,000 Units sold 3,600 Selling price per unit Rs.125 i) Cost per unit wn ii) Profitfor the month, (A) (NEW SMYANS.: COST PER UNE 101.25; PROFIT FOR THE MONTH = RS.82,000) PROBLEM 2: Prepare the cost sheet to show cost of production and cost per unit of goods manufactured by a company for the month 1017. Also find out the cost of sales. Particulars \V (inRS.) ‘Stock of raw material 1.7.2017 3,000 Raw materials purchased 28,000 Stock of raw materials 317.2017 4,500 Manufacturing wages 7,000 Depreciation on plant 1,500 Loss on sale part of plant 300 Factory rent and rates 3,000 Discount on sales 300 Advertisement expenses to be charged fully 600 Income tax paid 2,000 ‘Administrative overhead (relating to production) 900 The number of units produced during July, 2017 was RS.3000. The stock of finished goods was 200 and 400 units on 1.7.2017 and 31.07.2017 respectively. The total cost of units on hand on 1.7.2017 was RS.2,800.All these had been sold during the month (Ans: Total cost of production :38,0, cost per unit RS. 12.96, cost of sales; 37460) Note:, CA Inter _42.5e(2nd Version)_Costing (P)_Cost Sheet. 19Ph: 98851 25025/26 ww stermindsi PROBLEM 3: From the following data of ABC Ltd., Calculate Cost of production: ‘Amount (Rs) Repair & maintenance paid for plant & machinery 9,80,500 Insurance premium paid for inventories 26,000] iii) [Insurance premium paid for plant & machinery 96,000] iv)_[Raw materials purchased 64,00,000] v)_|Opening stock of raw materials 2,88,000 vi)_[Closing stock of raw materials 4,46 000 vii) [Wages paid 23,20,000] [Value of opening Work-in-process. 4,06,000 [Value of closing Work-in-process 6,02,100 [Quality control cost for the products in manufacturing process: 86,000] Research & development cost for improvement in production process 92,600 xii) [Administrative cost for: = Factory & production 9,00,000 = Others 11,60,000 xiii) [Amount realised by selling scrap generated during the manufacturing 9,200 process xiv) [Packing cost necessary to preserve the goods for further processing 10,200 xv) [Salary paid to Director (Technical) 2) 8,90,000) (AMT: MADRS aon I w8 (i) (ANS: €.0.P-1,05 48,000) ORS ala SO” Qs PROBLEM 4: A Ltd. Co. has capacity to pi 1,00,000 units of a product every month, Its works cost at varying levels of production is as undet Level Works cost per unit (Rs) 10% 400 20% 390 30% 380 40% 370 50% 360 60% 350 70% 340 80% 330 90% 320 100% 310 Its fixed administration expenses amount to Rs 1,50,000 and fixed marketing expenses amount to Rs 2,50,000 per month respectively. The variable distribution cost amounts to Rs 30 per unit. It can sell 100% of its output at Rs 500 per unit provided it incurs the following further expenditure: a) It gives gift tems costing Rs 30 per unit of sale: b) It has lucky draws every month giving the first prize of Rs 50,000; 2nd prize of Rs 25,000, 3rd prize of Rs 10,000 and three consolation prizes of Rs 5,000 each to customers buying the product. ¢) Itspends Rs 1,00,000 on refreshments served every month to its customers; CA Inter _42.5e (2nd Version)_Costing (P)_Cost Sheet 1.10No.t for CAICWA & MECICEC MASTER MINDS 4) It sponsors a television programme every week at a cost of Rs 20,00,000 per month. It can market 30% of its output at Rs 550 per unit without incurring any of the expenses referred to in (a) to (d) above. Prepare a cost sheet for the month showing total cost and profit at 30% and 100% capacity level. (®) (NEW SM) ANS.: TOTAL COST AND PROFIT FOR THE MONTH AT 20% CAPACITY LEVEL IS RS.423.23; RS-126.T2 AND 100% CAPACITY LEVEL IS Rs.296,00; Rs.104.00 RESPECTIVELY) Note:, PROBLEM 2: The books of Adarsh manufacturing company present the following data for the month of April, 2019 a) Direct Labour cost of Rs.17,500 being 175 % of works overheads. b) The cost of goods sold excluding administrative expense Rs.56,000 ¢) Inventory accounts showed the following opening and closing balances: Particulars April 4 April 30 Raw Material 8,000} 10,600} |Work-In-Progress 10,500} 14,500} Finished Goods 17,600 78,000) [Selling expenses 3,500 |General and administration expenses 2,500} [Sales for the month WS 75,000 Compute the value of materials purchased and ‘a cost staternent showing the various elements of cost and also calculate the profit carpet (A) (NEW SM) (ANS: VALUE OF MATERIALS PURCHASED 0; COST OF SALES IS 62,000; PROFIT EARNED IS 13,000) PROBLEM 3: DFG Ltd manufactures legtfembags for office and school purpose. The following information is related with the production jer bags for the month of September, 2019. (i) Leather sheets and cotton cloths are the main inputs and the estimated requirement per bag is two meters of leather sheets and one meter of cotton cloth. 2,000 meter of leather sheets and 1,000 meter of cotton cloths are purchased at Rs. 3,20,000 and Rs. 15,000 respectively. Freight paid on purchases is Rs. 8,500. (ii) Stitching and finishing need 2,000 man hours at Rs. 80 per hour. (ii) Other direct cost of Rs. 10 per labour hour is incurred. (iv) DFG has 4 machines at a total cost of Rs. 22,00,000. Machine has a life of 10 years with a scrape value of 10% of the original cost. Depreciation is charged on straight line method. (v) The monthly cost of administrative and sales office staffs ate R's. 45,000 and Rs. 72,000 respectively. DFG pays Rs. 1,20,000 per month as rent for a 2,400 sq. feet factory premises. The administrative and sales office occupies 240 sq. feet and 200 sq, feet respectively of factory space. (vi) Freight paid on delivery of finished bags is Rs. 18,000 (vii) During the month 35kg. of leather and cotton cuttings are sold at Rs. 150 per kg (viii) There is no opening and closing stocks for input materials. There is 100 bags in stock at the end of the month. Required: PREPARE a cost sheet following functional classification for the month of September, 2019. THEEND CA Inter _42.5e(2nd Version)_Costing (P)_Cost Sheet, at